The Australian newspaper reported that Chinese investment in Australian agriculture was set to boom, and the latest news had been warmly welcomed by local farmers.

The announcement establishes the Beijing Australia Agricultural Resource Co-operative Development Fund in a joint venture with Yuhu Agriculture Investment.

Federal Trade Minister Andrew Robb told the inaugural Australian Dairy Farm Investment Forum in Melbourne on Monday that the fund was especially keen to produce and export powdered infant milk formula to China, and was therefore committed to investing in local dairy farms and dairy processing.

The move came as another senior government figure, Barnaby Joyce, made his first tour of China as agriculture minister. He is leading a delegation of 40 members of the Australian agriculture sector.

Mr Joyce told Chinese producers that Australia's farmers would pose no threat to their livelihoods if the two countries were, as expected, to sign a free-trade agreement by the end of this year.

In Harbin, in China's Northeast, for the start of his tour, Mr Joyce repeated his position that Australia could never become " Asia's food bowl" simply because of the size of each nation's population, thereby trying to allay fears that Australia posed any kind of danger to their existence.

"We are not a threat to China; we will produce premium products to the people of China and they can be reliant on the fact that Australia does not have a hope in Hades of feeding the Chinese population, not even a portion of it," Mr Joyce said. "If we were to use all of our production, we could not feed just Australia and this province alone, we would run out of food."

In a separate move, a private Chinese company has reportedly bought the vast Elizabeth Downs cattle station in the Northern Territory.

With the Chinese bidder paying about $10.8 million for the 205,000-hectare land, the deal will not require sign off by the Foreign Investment Review Board, as it falls below the $13.5 million mandatory approval threshold.

The Chinese company also bought the 9,000 head of cattle on Elizabeth Downs for an estimated $6.3 million.

The Australian newspaper reported that the purchase was believed to be the first investment by a Chinese buyer in the northern Australian cattle industry, with Asian demand for beef expected to jump in the near future with the opening this month of an $82 million abattoir near Darwin.